Welcome to our blog. We are professors of management (and NASCAR fans) who teach a course on the business of NASCAR at Virginia Commonwealth University. We will post regularly on the business issues of NASCAR during the season and will include posts from our students. We invite comments. Dr. Jon Ackley and Dr. Michael Pitts

Search

Main menu

Tag Archives: NASCAR

Post navigation

After negotiations ended this past Monday between NASCAR and FOX TV, the television station may consider ducking for cover as fans are left hanging with many questions. When Fox TV signed contracts on Monday giving it the right to air the Sprint Cup Races through year 2022, it failed to give fans and consumers the lowdown on how it will go about televising the races starting in 2013, with the first races during Speed Weeks at Daytona. Their new network, Fox Sports One, will be the rebranded name of the SPEED network, but will it provide the same satisfaction for fans?

In relation to the benefits for the motor sports industry, this deal with FOX TV will boost NASCAR’s income, as well as the income for tracks and teams. This income, in turn, will help maintain lower ticket prices for fans and increase race winnings for teams, which possibly reduces the level of corporate sponsorship. However, this scenario may be at cost to the fans watching at home. Not only will Fox have rights to air the first 13 Sprint Cup races and the entire Camping World Truck Series, but it also gets the digital rights for online streaming yet it is unclear whether fans will have to pay for online access. With FOX also announcing that the new deal will take some of Sprint Cup races off network television, internet access for fans will be even more crucial than before.

The next big issue for fans is the question of how FOX will go about televising the practices and qualifiers. With no official word on the status of televising these events, it leaves fans with the possibility of not being able to watch at all. Even though Fox could air those events on its subordinate stations like Fuel TV or FX, the fans at home will not be pleased having to watch multiple channels to get their fix, especially when they could previously watch everything on the SPEED network.

The biggest issue comes from the clash between what commercial sponsors want and what the fans want. Considering that Fox TV is such a highly rated network, commercial sponsors will be fighting to place their ads during as many NASCAR events as possible. Unfortunately for fans, this means more interruptions that could prevent viewers from seeing their favorite racer cross the finish line or catching the wreck they’ve been waiting for the whole race to see. With the amount of money spent on ads by sponsors, the proposal for a split screen for commercials will not go over lightly. In the end, Fox has a lot of people to please, and it’s a sure thing that not everyone will walk away happy. JH

A.J. Allmendinger was recently reinstated by NASCAR after completing his drug program, which NASCAR calls the “Road to Recovery Program.” In my opinion this may have been a bad decision by NASCAR because it seems like they didn’t take his situation seriously enough. NASCAR should have taken time to more fully examine what was going on in Allmendinger’s life, such as looking into Allmendinger’s history and lifestyle. Originally, two drug tests were conducted by NASCAR and both were positive for an amphetamine, which means he definitely had something in him that wasn’t supposed to be there. Yet, Allmendinger claimed he didn’t know what or how it got in his body. If he got through NASCAR’s program in only a matter of a few months, then he might possibly be more likely to “do” drugs again later in his life. Prior drug use could also lead to drug use in the future even after he is retired from racing. An addict will always be an addict even after they quit using drugs and A.J. Allmendinger is no exception. NASCAR’s drug program is important for all drivers and teams in NASCAR because stock car racing is a dangerous sport and drivers and teams do not need anyone in the sport who is using drugs and racing cars at 150 mph. RA

The finish of this past weekend’s Sprint Cup race at Talladega was mayhem. The 25-car pileup, which resulted from Tony Stewart’s careless maneuvers to try to block his way to a win, was a spectacle to the fans on the front stretch but could have been deadly for all of the drivers involved.
The Richmond Times Dispatch quotes Dale Earnhardt, Jr. as saying, “If this is what we did every week, I wouldn’t be doing it, I’ll just put it to you that way. If this was how we raced every week, I’d find another job… It’s really not racing. It’s a little disappointing. It cost a lot of money right there. If this is how we are going to continue to race and nothing is going to change, how about NASCAR build the cars? It’ll save us a lot of money.”
While watching the final turns into the front stretch and the pileup occur, I could only imagine how frustrated and outraged many teams would be that their cars would have to be dragged off the track as a twisted heap of metal.
I am curious to know, in a dollar amount, how much the teams could salvage from their car given the severity of the damage. I know that the price in salvaged parts would be nowhere close to the total cost of running the race, but each team must be concerned with getting the maximum amount of money out of its investment. Talk about a risky investment.
With increasing costs in racing, saving money has to be at the top of every team’s “To-Do List”. The point that Jr. made about having NASCAR build all the cars brings up a great point that may be heavily considered in the near future.
One may be surprised how much money could be saved by individual teams if NASCAR had a factory that churned out a pre-built models and then distributed them to each team to finish off. I am not sure if this is a concept that has been considered before but it would appear to be fair and cost effective. If NASCAR could save each team $100,000 a week then that would add up to a hefty chunk of change at the end of the 36-week race season.
At this point in time the money invested in each car may not be a big deal to the larger teams such as Hendrick Motorsports or Joe Gibbs Racing, but to many of the smaller teams it could be a huge step in helping reduce costs. If teams were able to reduce costs each week, possibly new opportunities would be opened up for sponsors. NASCAR may not like the idea of having to build the cars for each team. Many teams may be completely against the concept, but something will have to change in the future. Something must be done when a major figure head of the sport openly says that if something does not change, he plans to find another job. SP

After being absent from NASCAR for over a quarter century, Dodge came back to NASCAR in 2001. However Dodge is making this 2012 season its last in both Sprint Cup and Nationwide Series.

Dodge’s departure from the two series leaves only three car manufacturers participating: Ford, Chevrolet, and Toyota. Toyota is, of course, the most recent manufacturer to join NASCAR but was greeted with much controversy from fans because it was the first foreign car manufacturer to be allowed to join NASCAR. With the departure of Dodge, NASCAR now only has two American manufacturers and many fans are wondering if the exit of Dodge leaves a vacancy for a second foreign manufacture to enter.

There is a silver lining to this story since Brad Keselowski, a Dodge driver, is first (as of this entry) in the Chase, and has the opportunity to send Dodge packing with a Sprint Cup Championship. SF

Although our class, “The Business of NASCAR” was not offered in the fall of 2011, the class is back on track for this year. Unfortunately, my colleague Mike Pitts is unable to be with us because of his teaching schedule. Assisting with the class is the Director of Public Relations at Richmond International Raceway, Ms. Aimee Turner. Ms. Turner will bring an entirely different perspective to our class discussions that will be even more beneficial to our students as they explore the “business of NASCAR”.

We’re now two races into the “Chase” and several different issues have arisen — forget about the fiasco with NFL replacement refs! Rule change for race cars, recent off-track issues with drug use, and another close end to the season come together for the end of the season. Our students have had the opportunity to attend the races at RIR, courtesy of the track, and have witnessed firsthand (for some) the excitement of what we call the “greatest sport in the U.S.”

Please feel comfortable to comment on the students’ blog entries throughout the next couple of months. I’m certain they will bring new perspectives to our sport. And that’s the view from here. Jon

In a tough economy cutting costs is always at the top of discussion, but how does the economy affect the motor sports market? Moreover, how do you avoid cutting costs to the point where people are not losing jobs? Unfortunately, the NASCAR Hall of Fame (HOF) is looking to cut between $2.5 million and $3 million annually in order to balance its budget. The reason for cutting costs is that attendance figures have not reached the level anticipated in Charlotte’s bid for the HOF. However, Tim Newman, CEO of the Charlotte Regional Visitors Authority (CRVA), stated in a recent NASCAR.com article that cutting costs at NASCAR’s HOF will not impact plans for any current or future exhibits nor the laying off of 27 ful-time employees. Nevertheless, the NASCAR Hall of Fame has witnessed a decline in the number of people visiting due to a poor and sluggish economy.
Subsequently, when trying to win the business of Hall of Fame participants, NASCAR finds itself competing with places like the Rock and Roll and the Country Music Hall of Fame, two other good attendance draws. Surprisingly, other sources reported that attendance at NASCAR was lower than expected during the summer months. The sluggish turnouts have resulted in a net loss of around $3 million for NASCAR. However, NASCAR is on par with anticipated attendance figures between 250,000 and 350,000 running close to Baseball’s Hall but just ahead of Pro Football’s Hall attendance according to this year’s projected forecast. Meanwhile, Country Music and Rock and Roll Hall’s first year’s attendance for both venues was estimated at around 800,000 respectively compared to the 800,000 respectively for the NASCAR Hall. In spite of a slow economy, NASCAR’s Hall of Fame was still the leader with around 300,000 as compared to baseball’s 280,000 and football’s 196,000. In retrospect, football’s highest attendance ever in the early 70’s was around 247,000. In conclusion, the NASCAR Hall is planning a new advertising campaign to help boost attendance.
It’s important to understand the dynamics of a sluggish economy whether it’s a lack of interest from tourists or the fact that people are just not flocking to the Hall of Fame on which millions were spent building. Ultimately, it’s important to remember that some individuals are able to visit the NASCAR Hall only by dipping into their discretionary income. Tim Newman suggested that there are several local promotions in the works; if successful, the local attendance could make budgets cuts less severe. AS

Corporate Social Responsibility (CRS) has become an integral part of business world now as huge corporations and even smaller businesses are now looked upon to show their commitment to their communities. NASCAR is not lagging behind in fulfilling its role of Corporate Social Responsibility. For example, the NASCAR Foundation came into being in 2006 and has been involved in charitable causes since its inception through different programs and with the help of various non-profit sponsorships. One of its emphasis has been on initiatives to help children to live, learn and play.

This time NASCAR has come up with the Coca Cola Chase for Charity Program in collaboration with its sponsor, the Coca Cola Company. This program involves auction of collectibles, autographed items from race tracks and Victory Lane, and drivers’ and teams’ personal collections. And since this auction is combined with a noble cause of charity, it has doubled the attachment of fans to this effort. This auction will conclude on December 3. I see this action plan of NASCAR executed at just the right time, when the audience is declining and reduction in viewership is occurring. It is a great way to attract fans in two ways, one by creating excitement of getting NASCAR related collectibles through auction and another by touching fans emotionally through this cause of being charitable.

Besides the NASCAR Foundation there are two more projects NASCAR is carrying forward in betterment of the NASCAR community. One is a “Green initiative” to reduce the environmental footprint of NASCAR and the other one is “Drive for Diversity” to increase minority and female participation in the sport. These efforts of NASCAR towards the good of the whole nation positions NASCAR distinctively in the minds of its viewers and fans. I, being fan of NASCAR, really appreciate the ways it is playing its role in CSR. I believe when our favorites come up with such good causes, the fans feel proud and the loyalty towards that brand increases. The current efforts of NASCAR towards the well being of community is once again making its hardcore fans feel immense pleasure in being associated with this sport and it may also help NASCAR regain some of the lost viewership and attendance. FA

There is a negative stereotype that circles the world of NASCAR. It is sometimes hard to get people to break their stubbornness and watch a NASCAR race. I feel that there are still many people who do not have the desire to experience what NASCAR has to offer to the sports world. I recently had a conversation with one of my co-workers. I was discussing with her my enrollment in the Business of NASCAR class and she was stunned but also somewhat bothered by the fact that there is a class offered on NASCAR. The questions she presented were “What is so great about NASCAR that they would go as far as to have a class about it? What is the point? It is a boring thing to watch and is not a sport at all.” To the defense of the sport, I generously shared with her the information obtained from class.

What she learned from our discussion made her think that just maybe there is more to NASCAR then 43 cars driving fast in circles. There is an actual business behind the sport. She seemed to become curious about other aspects of NASCAR, which leads me to the reason of the need for NASCAR education for people that have no knowledge of the sport. I think that not only would that be a great way to grow the interest in the sport, but also the viewership, sponsorships and the overall excitement of the sport itself. I talked to one person and answered her questions and left a positive impression on her; imagine what could happen if everyone had that same opportunity that she had to learn about NASCAR. RP

Elaborating on a discussion of the concession stands at NASCAR, it’s no surprise in this financially driven society that the number of merchandise options, both physical and virtual, are available to the multitude of NASCAR enthusiasts that represent likely the most diverse fan base in all of professional sports.
Possibly my favorite aspect of the NASCAR.com store was the custom shop page, a truly genius idea in my eyes. In this part of the website a fan, regardless of affiliation or level of NASCAR intensity, can select from many different types of clothing and outerwear as well as use numerous combinations of designs specific to NASCAR or its drivers. A wrinkle in the options that really benefits NASCAR is an extensive version of something I have seen in other similar sites, be they Greek school organizations or sports teams or anything similar. Each piece of merchandise, especially basic clothing, has not only the two basic sides (front and back) available for screen printing, but five possible positions: front, back, both sleeves, and an extra area at the top of the back for an optional driver’s signature or nameplate to make the shirt or sweat shirt that much more authentic. This personalizing comes with an extra $5 charge, a perfectly reasonable cost for “genuineness”. While most major sports’ websites do have the side sleeve option, the personal aspect of NASCAR’s edition – autographs, actual driver pictures – enables NASCAR to cater to that many more fans. Speaking specifically fiscally, the occurrence of more numerous merchandise options translates directly to a higher profit margin. The age old equation applies: More people, more money; more money, more fun.

It all comes back to business appeal and profitability, and while the NASCAR.com site cannot provide the atmosphere of a real NASCAR race, it does a great job of providing as extensive a selection of any particular brand of merchandise I’ve seen. The ability to cater to all types, shapes, and sizes really gives NASCAR a great deal of flexibility in the sales department. What other store offers grill covers, binoculars, cooler cushions, and satellite dish covers all with your favorite drivers’ name and number on it, and even some with the ability to be personalized further? The every-man nature of NASCAR’s business plan is really one to latch on to, and something I believe will continue to remain successful – as long as the gas doesn’t run out. DO

Diversity is one of the biggest issues facing NASCAR today. The sport is seen as a predominately white American sport, but I believe it is starting to change for the better. There are many different diversity programs in many areas that people rarely hear about. Some teams like Joe Gibbs Racing even have their own diversity programs. NASCAR itself has a diversity internship program that provides twelve internships for minorities and women in everything from business to engineering to technical positions. NASCAR’s primary diversity program is the Drive for Diversity. Drive for Diversity is the industry’s leading development program for minority and female drivers and crew members. The Drive for Diversity program currently supports drivers in two of NASCAR’s developmental series. Drive for Diversity also supports crew member candidates through a year-long pit crew training program. NASCAR more recently aired a show on BET, Changing Lanes. I tuned in and watched a couple episodes and was entirely impressed. It really tells a great story about these young drivers and what they really have to go through to compete at the highest levels of stock-car racing. Through the efforts of the sanctioning body and select teams, diversity is a word that is finally getting the attention it deserves in NASCAR. RI